One of many controversial statements in the Treasury Department’s blog delaying the Affordable Care Act’s employer mandate was that the government would be relying on consumers’ self-reported income for purposes of determining eligibility for a subsidy to purchase insurance on the exchange.  Many were concerned about the likelihood of fraud.  Potentially, consumers could claim their income was lower than it was in reality to receive a higher subsidy from the government.

In an a attempt to clear up the confusion, a new blog by the administrator of the Centers for Medicare and Medicaid Services states that federally- run exchanges will check the consumers’ self-reported income against electronic income data such as tax filings, social security, and current wage information.  State-run exchanges can choose their own method to verify incomes in 2014.  The IRS will reconcile the subsidies paid against a consumer’s tax return filed at the end of the year.  Any excess payments will be collected by the IRS.  This begs the question, what about those that do not legally have to file a tax return?

Additional documentation will be requested from individuals that do not file a tax return or state an income significantly below current wage data.  Further, a random sampling of applicants will be asked for more documentation.

Lastly, those seeking a subsidy to purchase insurance on the exchange must attest that they are not filing false information.  Providing false information will result in civil and criminal penalties.